CII urges govt to lower excise duty on fuel in Budget 2025-26

New Delhi: Leading industry body Confederation of Indian Industry (CII) on Sunday urged the government for lowering the excise duty on fuel to boost consumption in the forthcoming budget for 2025-26, especially at the lower income level, arguing that fuel prices significantly drive inflation.

Besides, the industry chamber also called for reducing marginal tax rates for personal income up to Rs 20 lakh per annum, saying that this would help trigger the virtuous cycle of consumption, higher growth and higher tax revenue as inflation has reduced the buying power of lower and middle-income earners.

“The central excise duty alone accounts for approximately 21 percent of the retail price for petrol and 18 per cent for diesel. Since May 2022, these duties have not been adjusted in line with the approximately 40 per cent decrease in global crude prices. Lowering excise duty on fuel would help reduce overall inflation and increase disposable incomes,” the industry body said.

“Domestic consumption has been critical to India's growth story, but inflationary pressures have somewhat eroded the purchasing power of consumers. The government’s interventions could focus on enhancing disposable incomes and stimulating spending to sustain economic momentum. Persistent food inflationary pressures also impinge upon low-income rural households who allocate a larger share to food in their consumption basket,” CII director general Chandrajit Banerjee, said.

Banerjee further said that while recent quarters have shown promising signs of recovery in rural consumption, targeted government interventions, such as increasing per unit benefit under its key schemes like MGNREGS, PM-KISAN and PMAY, and providing consumption vouchers to low-income households, can further enhance the rural recovery.

In its pre-budget proposals, the CII has also recommended an increase in the daily minimum wage under the MGNREGS from Rs 267 to Rs 375 as suggested by the ‘Expert Committee on fixing national minimum wage' in 2017, with the industry body estimating that this will entail an additional expenditure of Rs 42,000 crore. “The government should raise the annual payout under the PM-KISAN scheme from Rs 6,000 to Rs 8,000. Assuming 10 crore beneficiaries, this will entail an additional expenditure of Rs 20,000 crore,” it said.

Meanwhile, ahead of the budget, the CII has launched the second part of its landmark manufacturing competitiveness Study, focusing on the transformative impact of smart technologies on India’s manufacturing sector. The industry body also highlighted in a report that the sector’s ongoing digital transformation and its critical role in achieving the ambitious goal of increasing the manufacturing GDP share to 25 per cent in the near future.

The report showcases how cutting-edge technologies such as the internet of things (IoT), artificial intelligence (AI), machine learning (ML), robotics, and automation are reshaping the manufacturing landscape, driving optimisation, innovation, and global competitiveness. “High-capital industries like semiconductors, aerospace, and automotive are leading the charge in adopting these technologies, while traditional sectors like textiles and food processing are gradually transitioning towards digitalisation,” it said.